Economic Impact Analysis

What is Economic Impact Analysis?

Economic Impact Analysis is a methodology for assessing how a policy, initiative, or event affects a region or sector. By estimating direct, indirect, and induced economic effects, Economic Impact Analysis helps stakeholders understand the broader economic implications of their decisions.

Unlike Cost-Benefit Analysis which weighs total benefits against total costs, Economic Impact Analysis focuses on the broader economic activity generated by a policy, initiative or event.

How Economic Impact Analysis is Applied

Common contexts where Economic Impact Analysis is applied include:

• Major Events and Tourism: Major events like sports tournaments, festivals, and conventions significantly boost local economies by attracting visitors, increasing tourism spending, and creating short-term and long-term employment opportunities.

• Stadiums and Sports Facilities: The construction or renovation of stadiums and sports facilities serves as a powerful driver of economic activity, creating jobs in construction and operations while supporting local businesses. These projects can transform neighborhoods, attract further investment, and enhance civic pride, contributing to long-term economic vitality through increased visitor spending, new development opportunities, and improved community infrastructure.

• Transport Infrastructure: Investments in transport infrastructure, such as new highways, rail networks, and airports, have a profound impact on regional economic performance. By improving connectivity, these projects reduce travel times, lower transportation costs, and increase access to markets, labor, and resources. This leads to greater productivity, enhanced business competitiveness, and long-term economic growth for communities.

• Urban Redevelopment: Urban redevelopment projects such as mixed-use developments, affordable housing, and infrastructure revitalization, play a pivotal role in reshaping communities. Through these initiatives, cities can stimulate local economies, create jobs, and improve overall quality of life, making neighborhoods more livable and sustainable.

• Energy Projects: Renewable energy investments, such as wind and solar farms, not only address environmental sustainability but also drive local economic growth. These projects create jobs in construction, operations, and maintenance, while generating long-term benefits through energy cost savings and increased energy security.

• Public Utilities: Investments in public utilities, including water systems, broadband infrastructure, and electricity grids, are critical to driving economic growth, particularly in rural and underserved areas. These projects improve quality of life by ensuring access to essential services, create jobs in both the short and long term, and stimulate local economies by enhancing productivity and connectivity.

Our Approach

Although there is great interest in the economic impacts of major events or infrastructure projects, there is a wide variation in the methods used to undertake such analyses and economic impacts are often grossly overstated.

Our approach to conducting Economic Impact Analysis is grounded in best practice and applies rigour to ensure accuracy, transparency, and relevance. We follow a comprehensive process that includes:

1. Defining the Geographical Boundaries: We begin by clearly defining the geographic or economic region impacted by the initiative. Whether it’s a local community, a city, a state, or an entire country, we tailor our analysis to reflect the specific context, ensuring the results are aligned with stakeholder expectations.

2. Data Collection: Our team inform the collection of data crucial for Economic Impact Analysis, such as the components needed to estimate in-scope expenditure associated with an event. This data helps model the direct, indirect and induced economic effects, ensuring a full understanding of how the initiative impacts the economy.

3. Model Selection: We use a mix of trusted economic multipliers and specialist economic modelling platforms to accurately estimate indirect and induced impacts of the initiative, ensuring robust analysis.

4. Stakeholder Engagement: We involve stakeholders throughout the process, ensuring that our final report reflects their perspectives and objectives.

5. Transparency and Reporting: We prioritise clarity in methodology, assumptions, and reporting. Our detailed reports provide stakeholders with confidence in the analysis and the insights needed to make informed decisions.

Examples of our recent Economic Impact Analysis Work include

Australian Museum | Ramses & the Gold of the Pharaohs

One of our recent projects involved assessing the economic impact of the Ramses & the Gold of the Pharaohs exhibition at the Australian Museum, which ran from November 2023 to May 2024. The exhibition attracted over 500,000 visitors, making it the museum’s most successful event to date.

Our Economic Impact Analysis found that the exhibition contributed more than $57 million to the NSW economy in direct and indirect economic impacts.

The Sydney Morning Herald reported that the impact of the exhibition on the NSW economy was on par with Taylor Swift’s Eras tour to Sydney in February 2024 and had emboldened the museum to bring another blockbuster to Sydney, Machu Picchu and the Golden Empires of Peru, in November 2024.

Considering an Economic Impact Analysis?

Contact us today to discover how we can help your investigate or demonstrate the economic impact of your policy, initiative or event.